Financial News

Heathrow Investment 'To Raise Ticket Prices'

Officials at Heathrow Airport have announced £3bn of investment in a move that is likely to leave passengers paying higher prices.

The proposals include the opening of the new Terminal 2 next year, improved check-in and baggage facilities, and more customer service training for staff.

The airport wants regulators to approve a five-year plan which will see the fees it charges airlines to use the airport rise over the period 2014 to 2019.

If approved, the charges would increase from the equivalent of £19.33 per passenger for 2012/13 to as much as £27.30 in 2018/19.

Heathrow accounts for 78% of all long-haul flights from the UK.

The charges, which need to be approved by the Civil Aviation Authority (CAA), will help pay for the investment.

Heathrow chief executive Colin Matthews said: "Heathrow is the UK's only hub airport and a strategically important national infrastructure asset. Heathrow faces stiff competition from other European hubs and we must continue to improve the service we offer passengers and airlines.

"We have invested billions of pounds in new facilities such as Terminal 5 in recent years and passengers say they have noticed the difference.

"Our plan for a further £3bn of private-sector investment will further improve the airport for passengers. The plan represents good value for money for airlines and passengers and comes at no cost to taxpayers."

He said the airport envisaged passenger numbers increasing from just under 70 million now to around 72.6 million by 2018/19.

Asked about the possibility of a third runway, Mr Matthews said that with all that would be need to be done in terms of political decisions and planning there was unlikely to be "any shovel going into the ground realistically for the period we are talking about (2014 to 2019)".

He said that the proportion of Heathrow passengers rating their journey as very good or excellent had increased from 48% in 2007 to 72% today.

While airlines have supported plans for better customer service they have concerns about the rise in charges.

British Airways said: "Heathrow Airport's charges have already tripled over the past 11 years. The charges must be reduced significantly over the coming years, especially when the airport is cutting investment by around 25% from next year onwards.

"We hope the regulator (the CAA) will give a fair ruling in the months ahead, which doesn't penalise customers and airlines."